12/23/2002 @ 12:00AM

85 Innovations 1972-1987

For more than seven decades X rays allowed doctors to peer inside the body, but just enough to see the skeleton. Working separately, Godfrey Hounsfield and Allan Cormack each developed a method of replacing X-ray film with crystals, rotating a camera around the body and using a computer to collate multiple images. The result: detailed pictures of internal slices of the body, which made many diagnostic surgeries unnecessary. Soon after, chemistry professor Paul Lauterbur wrote an article suggesting that nuclear magnetic resonance could be used to create images, leading to the development of magnetic resonance imaging (MRI), which created even more detailed 3-D images of internal organs.

1972
Ethernet

While at Xerox’s Palo Alto Research Center, Robert Metcalfe was charged with hooking up all the scientists’ computers into a single, fast network. He coined the term Ethernet to describe the system of wires and microchips that allow computers linked locally to talk to one another without drowning each other out. But his real achievement was getting Xerox to share the technology with Digital Equipment Corp. and Intel, making Ethernet an industry standard–it’s now the most widely used technology for local area networks–and then founding 3Com in 1979 to sell the technology.

1972
UNIX/C Programming

The original computer operating system and language, it is still used throughout the world. Bell Labs researchers Dennis Ritchie (b. 1941) and Kenneth Thompson (b. 1943) created a system based on simple, discrete commands that worked on multiple machines and supported many users; one person could try out Spellcheck, while another created a document. C programming paved the way for thousands of applications. Today UNIX is still used to run most Internet servers and large business systems.

1972
E-Entertainment

Nolan Bushnell (b. 1943) gave geeks another reason to stay indoors by introducing Pong, a crude electronic tennis game, which was later miniaturized for the home. Bushnell’s Atari dominated the videogame market, but he eventually sold out and started the Chuck E. Cheese’s pizza parlor chain. The game brand he created is more visible today on hipster T shirts than on TV screens. But the industry he started, now dominated by Sony and Microsoft, generates more money in the U.S. than the movie business gets at the box office.

1973
Discount Brokerage

It’s unlikely taxi drivers would have turned into day traders had it not been for Charles Schwab (b.1937). He positioned his company as the anti-Wall Street firm, dumping all the trappings of a typical brokerage house–the commissions, front-end loads, markups and fees–in exchange for simple, low-priced, per-trade fees. Today his San Francisco-based outfit serves 8 million investors who control $800 billion in assets.

1974
Catalytic Converter

America’s long love affair with cars produced one unwanted offspring: smog. After Congress passed the Clean Air Act of 1970, Corning scientists Rodney Bagley, Irwin Lachman and Ronald Lewis raced to come up with a product that would help automakers comply with the emissions guidelines. The ceramic honeycomb the trio created is part of a car’s exhaust system, where it converts 95% of pollutants into water vapor and carbon dioxide.

1974
Index Fund

Though there is debate over who first came up with the idea of the index fund–Harry M. Markowitz (b. 1927) won a Nobel Prize for work that touched on the concept–John C. Bogle (b. 1929) gets credit for bringing it to the masses through his First Index Investment Trust. Now known as the Vanguard 500, the idea was to keep the fund simple and cheap by mimicking a basket of stocks made up of the 500 largest companies. The idea was slow to catch on–in its first year it reportedly raised $11 million–but eventually had a huge impact on money management. Bogle’s firm went on to become the second-largest mutual fund manager, with assets of $560 billion. And he now has plenty of company–today there is $340 billion invested in pure equity index funds.

1976
Personal Computer Chic

Apple cofounders Steven P. Jobs (b. 1955) and Stephen Wozniak (b. 1950) helped usher in the era of the PC by making their machines accessible and cool–as desirable, in their way, as sports cars. But because Apple never made a serious stab at the business market, it has always been a shrimp compared with larger outfits. Those same competitors, though, were always ready to adopt Apple’s innovations in user-friendly design and clever marketing. Wozniak retired in 1985; Jobs was forced out of the company in 1985, but returned in 1997 to lead Apple’s latest incarnations.

1976
Recombinant DNA

Robert Swanson, then a 29-year-old venture capitalist, teamed up with University of California, SanFrancisco professor Herbert Boyer to commercialize Boyer’s breakthroughs in “recombinant DNA” technology–splicing together strands of DNA to whip up marvels like human insulin for diabetics, growth hormones for children and antibodies for cancer patients. The two founded Genentech, the first in a wave of biotech companies. It went public in 1980, raising $35 million. Swanson died in 1999. Today his $17 billion (market cap) company does $2.2 billion in sales.

1977
Cash Management Accounts

After a meeting with members of the Stanford Research Institute, Merrill Lynch chief financial officer Thomas Chrystie came up with the idea of an all-in-one account that included check-writing, money-market benefits, a Visa card and brokerage services. The idea was slow to take off, and Merrill nearly abandoned it. But it eventually became copied to the point of ubiquity, giving inspiration to those who harbored dreams of creating megabanks.

1977
Original-Issue Junk Bonds

Michael Milken opened up the capital markets to fledgling firms by putting together a $30 million bond issue for a small oil company called Texas International. The bait for investors: a high yield of 11.5%. Milken continued his pioneering work throughout the 1980s at Drexel Burnham Lambert, creating a high-yield market that funded job creation and technological advancement–while earning enormous paychecks for himself. By the end of the decade the reputations of both Milken and his bonds were tarnished, but neither has gone away. Milken has fashioned himself from a onetime federal prisoner into a formidable philanthropist, and junk bonds raised $46 billion in the first 11 months of 2002 alone.

1979
Spreadsheet

Daniel Bricklin (b. 1951) and Bob Frankston (b. 1949) created VisiCalc, a computer program that liberated accountants and other business professionals from hours of paper-pushing by letting them record financial data and quickly manipulate it for comparative analysis. VisiCalc also helped fuel the PCrevolution by demonstrating real-world uses for the then-exotic machines. But after legal problems, VisiCalc was sold to Lotus, whose 1-2-3 had already superseded it as the dominant spreadsheet.

1984
Liquid Crystal Displays

Liquid crystals–which exist between solid and liquid states–were first discovered in 1888 by Austrian botanist Friedrich Reinitzer. They were put to use 80 years later when teams at RCA Labs and Kent State independently created early liquid crystal displays by manipulating the crystals with electrical charges. The displays first show up in digital clocks and watches, but in 1984 LCD resolution improved to the point where it could display images instead of mere text, allowing computer makers to create lightweight laptops and free PC users from their desks.

1984
Customized Mass Retail

Michael Dell got into the disintermediation business–bypassing distributors–during his freshman year at the University of Texas at Austin. He bought overstocked IBM PCs at cost from local dealers, then sold them to consumers at 10% below list. He dropped out of school that year, and started selling his own homemade versions of the computers for $795–built to customer specs. Now Dell dominates the PC market, posting $31 billion in annual sales. More impressive, his customized retail strategy, once an anomaly in the computer business, is now standard practice. That’s good news for customers and for the mass distributors who parcel out the machines, but worrisome for conventional retail outlets.

1987
Mevacor

It took more than 35 years for scientists at Merck to conjure up Mevacor, the first widely used drug that reduced cholesterol. The pill worked by blocking an enzyme from creating mevalonic acid, thwarting the liver’s production of cholesterol. Under Chief Executive P. Roy Vagelos, Merck researchers developed Zocor, a second generation of the drug, and proved that it, as well as other cholesterol-lowering drugs, reduced the risk of heart attack. Zocor sales jumped in 1995 when the FDA approved it as a product to prevent heart disease in patients who already suffered a heart attack.